The Supreme Court has restored an order requiring William Loughnane, the 99% shareholder and controller of W.L. Construction, to pay the defendants’ costs after the company’s claim against them was dismissed in the High Court.
The appeal concerned costs only. The High Court had dismissed W.L. Construction’s claim for payment under a building contract and ordered Mr. Loughnane, who was not a party to the original proceedings, to pay the defendants’ costs. The Court of Appeal set that order aside because he had not been warned during the trial that the defendants might seek costs against him personally. The defendants appealed to the Supreme Court.
In a judgment delivered on 31 October 2019, Ms Justice Iseult O’Malley said notice was an important factor, but not an absolute precondition to a non-party costs order. The court had to consider all the circumstances and exercise its discretion to reach a just result.
The High Court had found that Mr. Loughnane repeatedly lied under oath and put forward invoices that were fraudulently altered or irrelevant to the work. It dismissed the company’s claim both as an abuse of process and because the evidence did not establish that any debt was due. Those findings were not challenged in the appeal, the Supreme Court noted.
The Supreme Court said Mr. Loughnane was the company’s controller and the moving party behind the proceedings. He had instructed the quantity surveyor, and the High Court had found no one else responsible for the outcome. His conduct exposed the defendants to substantial legal costs, while the company could not meet them. The Court also considered that he stood to benefit to some extent if the company had succeeded.
The Court allowed the defendants’ appeal, holding that the Court of Appeal had been wrong to reverse the High Court’s decision. The judgment therefore restored the non-party costs order. It did not make Mr. Loughnane liable for the company’s underlying claim or debt.